THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[18:00:00] BRIANNA KEILAR, CNN GUEST HOST: CNN has learned Donald Trump is set to roll out a new policy replacing his controversial ban on Muslims entering the U.S., this as his poll numbers slip and many Republicans grow more nervous. I will ask Trump's national spokeswoman about this shift in strategy.

Tag team. Hillary Clinton gets a powerful assist in skewering Trump from a senator believed to be on her V.P. short list. Was Elizabeth Warren auditioning?

And flood warning. A desperate search and rescue operation is under way in West Virginia, as fears of more rain and more deaths hang over this disaster zone. Tonight, hundreds of National Guard troops are on the move.

We want to welcome our viewers in the United States and around the world. Wolf Blitzer is off. I am Brianna Keilar. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

KEILAR: Breaking news this hour, U.S. stock prices plummeting lower as the turmoil deepens, after Britain's vote to quit the European Union, the Dow closing down more than 260 points a short time ago.

And also breaking, strong reaction on both sides to the most significant Supreme Court ruling on abortion in two decades, in a 5-3 ruling, the court striking down a Texas law, one of the nation's toughest restrictions on access to abortion.

In the presidential race, Hillary Clinton teaming up with senator Elizabeth Warren for the first time in this campaign, appearing at a rally in Ohio. Warren, a potential V.P. choice, unloaded on Donald Trump, calling him a small, insecure money-grubber who would crush everyday Americans "into the dirt."

Tonight, Trump is firing back, calling Warren a sellout and a turncoat. Even as he unleashes his red-hot rhetoric, CNN has learned Trump is set to back away from his controversial proposal to ban Muslims from entering the U.S. We're told that he will make the immigration ban temporary and it will no longer be focused specifically on Muslims. I will ask Trump's national campaign spokeswoman, Katrina Pierson,

about that. She will join us live. And our correspondents, analysts and guests have full coverage of all the news breaking right now.

First, I want to go to CNN justice correspondent Pamela Brown. She is live for us at the U.S. Supreme Court.

And this ruling today, Pamela, this abortion is something that could have ramifications far beyond Texas.

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: That's right, Brianna.

This high court ruling will no doubt have a huge ripple effect jeopardizing other abortion access laws being challenged in the lower courts and deterring other states from passing similar laws. No doubt this is a huge victory for abortion rights activists.

(BEGIN VIDEOTAPE)

BROWN (voice-over): Today's decision considered one of the most consequential by the court in several decades not only threw out a Texas law. It once again threw the court back into the middle of the presidential campaign.

BROWN: In a 5-3 ruling, the Supreme Court struck down a controversial Texas law requiring abortion clinics to meet many of the same rules as hospitals, such as wider hallways and minimum numbers of parking spaces, and for clinic doctors to have admitting privileges at nearby hospitals.

Supporters argued the rules would make abortion safer, but opponents said the law was designed to be too stringent, forcing clinics that couldn't meet the restrictions to close, an argument with which the court agreed.

ELIZABETH WYDRA, LEGAL ANALYST: The law would have shut down the majority of clinics in Texas. And the court said you can't do that without showing that there's a real justification and here there wasn't.

BROWN: Writing for the majority, Justice Stephen Breyer said the law violated the Constitution and placed a substantial obstacle in the path of women seeking an abortion.

Joining Breyer in the opinion, the court's three female justices, Ginsburg, Kagan, and Sotomayor, along with Anthony Kennedy. Kennedy, who was nominated by Ronald Reagan, has become a swing vote in abortion cases, siding with liberals to reaffirm Roe vs. Wade with 1992, then with conservatives nine years ago to ban some late-term abortions. WYDRA: It wouldn't have mattered if there was a President Trump

nominee or if Justice Scalia was still on the bench. In that case, you would have been a 5-4 ruling instead of a 5-3 ruling. But either way, you would have had Justice Kennedy joining the former liberal justices to provide a majority supporting abortion rights in this case.

BROWN: In a bitter dissent, Justice Clarence Thomas said the case should have never been heard, writing -- quote -- "The court has allowed abortion clinics and physicians to invoke a constitutional right that does not belong to them, a woman's right to abortion."

Tonight, the Texas governor said the ruling -- quote -- "erodes states' lawmaking authority to safeguard the health and safety of women."

But the White House cheered it. President Obama posting on Twitter that -- quote -- "Every woman has a constitutional right to make her own reproductive choices."

(END VIDEOTAPE)

[18:05:05]

BROWN: And also today the high court unanimously threw out the public corruption conviction of Governor Bob McDonnell of Virginia, but left the door open for it to be retried.

And the justices said today the fact that the governor set up meetings for a Virginia businessman in exchange for $175,000 worth of gifts and loans was distasteful or perhaps worse. It was not considered an official act -- Brianna.

KEILAR: Pamela Brown at the Supreme Court, thank you.

And now to the Democrats' one-two punch against Donald Trump. Senator and progressive firebrand Elizabeth Warren joining with Hillary Clinton to rally voters in the crucial swing state of Ohio.

The scorn for Donald Trump was sharp and sustained. That's the one thing above all that unifies Hillary Clinton and Elizabeth Warren. But the whole spectacle today left cheering Democrats wondering if they are seeing history in the making or simply one Democrat trying to help another stop Donald Trump.

(BEGIN VIDEOTAPE) ZELENY (voice-over): Hillary Clinton and Elizabeth Warren on the same stage and the same side. Warren withheld her endorsement for more than a year. So, they lingered today for nearly two minutes.

SEN. ELIZABETH WARREN (D), MASSACHUSETTS: Whoa.

ZELENY: Soaking up the admiration from Democrats in Cincinnati.

WARREN: Thank you. I'm here today because I'm with her. Yes, her.

(CHEERING AND APPLAUSE)

ZELENY: And then she got down to business.

WARREN: She knows what it takes to beat a thin-skinned bully who is driven by greed and hate.

ZELENY: For weeks, Warren has been needling Trump, which Clinton has enjoyed from afar. She beamed today at close range.

HILLARY RODHAM CLINTON (D), PRESIDENTIAL CANDIDATE: I must say, I do just love to see how she gets under Donald Trump's thin skin.

ZELENY: And Trump just may have been watching, sending this tweet just before they took stage. "Crooked Hillary is wheeling out one of the least productive senators in the U.S. Senate, goofy Elizabeth Warren."

Warren came armed with a response.

WARREN: Donald Trump says he will make America great again. It's right there. No, it's stamped on the front of his goofy hat.

(LAUGHTER)

WARREN: You want to see goofy? Look at him in that hat.

ZELENY: The Warren-Clinton show, part pep rally, part audition, made clear the hatchet is buried between the two Democrats, at least publicly.

CLINTON: You just saw why she is considered so terrific, so formidable, because she tells it like it is.

ZELENY: On stage today, Warren said Clinton won't back down.

WARREN: She gets up and keeps right on fighting for the people who need her most.

ZELENY: But she suggested in interviews and her 2004 book that Clinton caved on a bankruptcy bill in the Senate, writing: "It seems that Hillary Clinton could not afford such a principled position."

WARREN: She's taken money from the groups, and more to the point, she worries about them as a constituency. ZELENY: Those concerns went unspoken today with one plug after

another. But if Clinton would tap Warren as her running mate, they would surely return. For now, they share a common objective, stopping Trump.

CLINTON: Donald Trump proves every day he's not in it for the American people. He's in it only for himself. And Elizabeth reminds us of that every chance she gets.

ZELENY: And Clinton even struck a populist tone, sounding familiar strains to Warren and Bernie Sanders.

CLINTON: I got into this race because I wanted to even the odds for people who have the odds stacked against them. And this is not a time for half-measures. We have got to go big and we have got to go bold.

(END VIDEOTAPE)

ZELENY: Now, for all the attention on Elizabeth Warren today, we must point out that she's only one of the Democrats on the list of people who the Clinton campaign is considering.

Tim Kaine, the senator from Virginia, also squarely in the hunt for this. But, Brianna, I was struck a couple hours after this speech when Hillary Clinton was in Chicago. She addressed head on one of the biggest challenges of her campaign, the fact that voters don't trust her. She acknowledged for the first time in a deep way that she needs to work on this. She knows they don't trust her.

And it's something she's trying to get over. She said it's natural because she's been in the public eye for so long. But, Brianna, so interesting that she's trying to get ahead of this. Of course, there are some big things looming out there this summer, like her FBI interview over the e-mail scandal and this long-awaited Benghazi report that will come out at some point, we think, this summer -- Brianna.

[18:10:02]

KEILAR: Yes. It was fascinating, Jeff, where she talked about it at more length than we have heard her speak about.

Thanks so much, Jeff Zeleny, for us in Cincinnati.

And I want turn now to Donald Trump's campaign and breaking news about changes to one his most controversial proposals, to ban Muslim immigrants from entering the United States.

CNN's Sunlen Serfaty has more on that.

And, Sunlen, this appears to be a pretty significant about-face.

SUNLEN SERFATY, CNN NATIONAL CORRESPONDENT: That's right.

This is potentially a big change for him, Brianna, sources telling CNN's Jim Acosta and Gloria Borger that Donald Trump is reworking this policy. It will now no longer be a ban on all Muslims, but will now be a ban on immigration coming from countries with known terrorism links.

Trump is certainly trying to hit the reset button on his campaign, including making these policy changes, but this is still -- he's still now getting pulled into old fights.

(BEGIN VIDEOTAPE)

SERFATY (voice-over): The presumptive GOP nominee today blasting Elizabeth Warren after she attacked him during an appearance with Hillary Clinton.

WARREN: That who Donald Trump is, the guy who wants it all for himself. And watch out, because he will crush you into the dirt to get whatever he wants.

SERFATY: Trump responding that Warren is a sellout and once again referring to Warren by his favorite nickname for the Massachusetts senator, Pocahontas, telling NBC News -- quote -- "She used the fact she was Native American to advance her career. Elizabeth Warren is a total fraud."

This as former Senator Scott Brown, a Trump surrogate, taking the attack to a whole new level today, challenging Warren to move her Native American heritage.

SCOTT BROWN (R), FORMER U.S. SENATOR: Harvard and Penn can release the records. She can authorize the release of those records. She can take a DNA test. She can release the records itself. And there's never been any effort.

SERFATY: The latest attack on Warren comes as Donald Trump is trying to hit the reset button on his campaign, taking steps to reposition himself to the general election, shifting his stance on a central piece of his campaign.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: Donald J. Trump is calling for a total and complete shutdown of Muslims entering the United States.

SERFATY: Trump is now softening his position, no longer supporting a ban on all Muslims coming from the U.S., just those from terror states as long are they are vetted strongly.

QUESTION: You said countries linked to Islamic terrorism will be blocked in terms of immigration. So, would a Muslim coming from Scotland or Great Britain, does that -- have you tweaked your policy on that?

TRUMP: Wouldn't bother me.

SERFATY: Trump is also tweaking his campaign trail message, dialing down the frequency and fervor of his tough talk on immigration.

TRUMP: I'm putting the people on notice that are coming here from Syria, if I win, they're going back.

SERFATY: No longer featuring his call to deport undocumented immigrants in his stump speech.

TRUMP: We want people coming into our country, but they have to come in legally.

SERFATY: Trump's attempt at making some recalibration coming just one week after the firing of his campaign manager, Corey Lewandowski, and with his campaign facing serious headwinds.

New polls show Hillary Clinton with a clear lead in national polls and reveal real warning signs for Trump beneath the surface. While both candidates have high unfavorable ratings, more voters see Trump in a negative light. And a hefty two-thirds of voters see him as unqualified to be president, an assessment that even Senate Majority Leader Mitch McConnell tried to dodge.

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: He has made a number of mistakes over the last few weeks. I think they are beginning to right the ship.

SERFATY: Refusing to stay whether he believes that Trump is qualified to be president.

MCCONNELL: Look, I will let the American people decide.

(END VIDEOTAPE)

SERFATY: And as Trump is looking to retool many aspects of his campaign, tomorrow, he is slated to give what is being billed as a major economic address outside of Pittsburgh, Pennsylvania, a swing state. This would be his first appearance, Brianna, since returning from his trip abroad.

KEILAR: Sunlen Serfaty.

And joining me now, the national spokeswoman for the Trump campaign, Katrina Pierson.

Katrina, thank you so much for talking with us today.

And there is this reporting that we have a change to Donald Trump's proposed Muslim ban. How does this work?

KATRINA PIERSON, TRUMP CAMPAIGN SPOKESPERSON: Well, it's only really a change if you never knew what the ban was to begin with.

I know the news media has been reporting that the initial ban was against all Muslims and that simply was not the case. It was simply for Muslim immigration. And Mr. Trump is simply adding specifics to clarify what his position is, as opposed to what the media has been reporting what it is.

There's been no change to this. Mr. Trump still wants to stop individuals from coming into this country who cannot be vetted. KEILAR: All right, I think we actually have the sound bite of his

initial -- one of his initial explanations of the ban. Is that right? Is that right, David? All right, let's listen to that.

(BEGIN VIDEO CLIP)

TRUMP: Donald J. Trump is calling for a total and complete shutdown of Muslims entering the United States until our country's representatives can figure out what the hell is going on.

(END VIDEO CLIP)

[18:15:06]

KEILAR: OK, so, Katrina, that was how he explained it. How is this not an adjustment?

(CROSSTALK)

PIERSON: That was a line that he read from the policy. The policy in and of itself was an immigration policy. So, the context there is extremely important.

And we have said this a number of times throughout the few months, until we could figure out what is going on. And since that statement was made, we have had the CIA and the FBI come out and tell us that we have ISIS soldiers who are infiltrating the refugee program coming into the United States.

Mr. Trump does not want that. He does not want people like what happened in San Bernardino to exploit the visa system coming into this country and killing Americans. Mr. Trump doesn't want to allow individuals to come into this country and essentially create homegrown terrorism.

KEILAR: Well, so how does this work?

It's no longer focused on Muslims, but then instead it's looking at people coming from countries who train and equip terrorists. Before, he said Muslims. And so now he's going -- he's not going to characterize it as Muslims?

(CROSSTALK)

KEILAR: Immigrants. And I'm talking about immigrants. You say it's about immigration. I'm talking about immigration. I'm talking about visitors coming to the country.

PIERSON: Well, right. But the initial reports were all Muslims, even extending it to American-Muslims, which didn't make any sense.

And we can go back to that footage and look. This had nothing to do with American Muslims or even soldiers, for that matter. But Mr. Trump is going to be refining his policy, putting out more specific details which everyone has been asking for. But there has been no change. He still does not want to allow individuals to come into this country who cannot be vetted.

KEILAR: Individuals or Muslims?

PIERSON: Well, it doesn't matter really where you're coming from, except for fact that the terrorist nations, which is something that he is adding to this policy, to make it more clear that if you are coming from a hostile nation, and you cannot be vetted, absolutely, you should not come into this country.

But individuals are the same. We can't allow individuals to come into this country that cannot be vetted.

KEILAR: OK, but you're talking about terrorists countries.

And what we have seen is individuals who are from Belgium, who are from France.

PIERSON: That's the point.

KEILAR: Those you wouldn't technical -- so you're talking about -- so explain who is not allowed in and what countries we're talking about and also how you're dealing...

(CROSSTALK)

PIERSON: An individual -- an individual that cannot be vetted.

As we know, ISIS has exploited passport systems in some of these countries. The individual that came in on the K-1 visa, they didn't even know where she was from initially. If you cannot be vetted, you should not be allowed into this country.

And I think that speaks volumes if we're allowing people into this country where we do not know their intentions, we do not know where they are from and if they are coming from hostile territories. That's extremely dangerous right now.

KEILAR: How it not a change if before he was saying -- talking about Muslim immigrants and now you're saying individuals? And the reporting that we have coming from Gloria Borger and Jim Acosta is that he's not talking about Muslims. He's not emphasizing that label.

PIERSON: That is a part of the label. What I'm saying again is the initial ban on Muslims immigrating into the country that cannot be vetted, he still does not want to come into this country.

If you can be vetted, it's a different story. Mr. Trump is talking about those that potentially are a threat to this nation. That's one of the things the federal government is supposed to be doing and that's protecting homeland security.

What he's going to be doing is putting specifics out there so that everyone is clear that he's not talking about Americans abroad or soldiers or anything like that. This is simply an immigration position, not to mention a national security position, that you should not be allowed to come into this country unless you can be vetted.

KEILAR: There's no religious part to this? If you're Muslim and you can be vetted, it's not a problem, you can come into this country, is what you're saying?

PIERSON: Well, even in his initial statement, when he said until our politicians can figure out what's going on, that's exactly what that means.

But our politicians have told us we cannot vet these people coming across the border right now, and we're bringing them in by the tens of thousands. There is a problem and a disconnect between politicians and the people of this country.

KEILAR: Christians, how would that work? What is the religious aspect here? If they're Christian and they can't necessarily be vetted, then that's a problem too is what you're saying?

PIERSON: What I'm saying is, if you are coming into this country and you cannot be vetted, then you should not be allowed in until you can be vetted.

This is not rocket science. This is a man who wants to protect the homeland, unlike what we see with Barack Obama and Hillary Clinton for 15 years have allowed our borders to be wide open, paying -- using taxpayers' dollars to bring in refugees and others into this country, creating homegrown terrorism. That has to stop.

[18:20:10]

KEILAR: What is the vetting process?

PIERSON: That's a great question.

I'm so glad we could get there. That's a question for the FBI and the CIA, who have told us that they do not have a vetting process. That's something that, as president, Mr. Trump wants to get with Congress to filter that out, because we do not have one yet.

KEILAR: OK.

Can you sort of flesh that out a little bit for me? Because you're talking about Donald Trump getting together with Congress. So, this isn't actually his vetting process. This is something he wants to work out with entities that he currently believes are failing at vetting?

PIERSON: Donald Trump is not talking about the vetting process. Donald Trump isn't talking about the vetting process. Donald Trump is talking about individuals coming into this country, period. That's it.

KEILAR: OK. You're talking about whether or not they can be vetted.

PIERSON: Until our politicians can figure out what's going on, the vetting process needs to take place, the FBI and the CIA. We have departments and agencies that are supposed to be doing this, and they're not.

KEILAR: But he said he doesn't trust the vetting process. So, what is his proposal to address that process that he's...

PIERSON: We don't have a vetting process, Brianna. We don't have a vetting process.

(CROSSTALK)

KEILAR: But Donald Trump doesn't have a vetting process?

(CROSSTALK)

PIERSON: ... FBI director and the CIA -- no, the FBI and the CIA don't have a vetting process. They are trying to figure it out.

KEILAR: But what is Donald Trump's proposal for a vetting process?

PIERSON: Mr. Trump has already said that he wants to make sure no one comes into this country unless they can be vetted.

And the CIA and the FBI and the intelligence agencies need to figure out a process before we allow anyone else to come into this country, creating a second generation of homegrown terrorism.

KEILAR: OK. I want to talk more about that vetting process. I think there's still some details that we need to work out on that.

Katrina, stay with me. We will talk about it after a break.

(COMMERCIAL BREAK)

[18:26:18]

KEILAR: And we're back now with Trump campaign national spokeswoman Katrina Pierson and this breaking news that Donald Trump is going to drop Muslim from his proposed immigrant ban.

So, I do want to get into some of the details of this with you, Katrina. This is a ban not on Muslims, but rather, according to our reporting, a ban on immigration coming from countries with known terrorism links, training and equipping.

I'm still unclear what countries this includes.

PIERSON: Well, as mentioned, Mr. Trump is going to release more specifics to answer all of your questions.

(CROSSTALK)

KEILAR: So, but he will then describe the countries that he's talking about? Specifically, is he going to be providing those details?

PIERSON: Absolutely, he's going to provide those details.

And to our discussion earlier, we do not have a vetting process in place. That's according to the CIA and the FBI. So, the question begs is, what vetting process is Hillary Clinton talking about, since she wants to bring in tens of thousands of more of these refugees into our middle-income communities?

Because these refugees are not being resettled in the affluent communities or in the politicians' neighborhoods. And so maybe she needs to tell us what the vetting is that makes it OK to move these people into the neighborhoods of the United States.

KEILAR: And I do think that is a question certainly for her national spokesperson.

But since I have you here, I want to know what the vetting process would be for Donald Trump. You're talking about the CIA and the FBI, institutions that clearly Donald Trump does not agree how they are vetting right now. You're saying he should get together with Congress. It is controlled by his party at this point in time.

PIERSON: Well, there is...

KEILAR: So, what are his ideas about vetting?

(CROSSTALK)

PIERSON: There is no disagreement with the intelligence agencies on the vetting process, because the intelligence agencies have said that there isn't a vetting process. And that's the problem, whereas Hillary Clinton says there is.

You have the FBI director and the CIA saying that there isn't. So, Mr. Trump wants to stop people from coming into this country that cannot be verified or vetted until we can get a process in place, which would have to come from the intelligence agencies.

And I'm sorry, Brianna. I don't get the intelligence briefings every day, because, if I did, I would be happy to create a vetting process for you. But, unfortunately, our lawmakers right now haven't done that. And that's exactly what they're working on.

KEILAR: Well, let me describe to you -- actually, there is a vetting process in place. And this is what it is.

(CROSSTALK)

PIERSON: For Syrian refugees?

KEILAR: The vetting begins with the United Nations High Commissioner for Refugees, which determines who will count as a refugee, who should be resettled -- that's about 1 percent -- and then which countries can take them.

This alone can take quite some time, four to 10 months. Their names, their biographical information, their fingerprints, they are run through federal terrorism and criminal databases. And then the refugees are interviewed by the Homeland Security Department. Then, if they're approved, they undergo a medical screening, a match

with sponsor agencies -- that's called cultural orientation classes -- and one final security clearance. It's -- that is a process that can take one to two years, even longer. And it happens before a refugee ever steps onto American soil.

How does Donald Trump want -- and this is according to PolitiFact. This has been -- this vetting process and the concept of it has been vetted itself.

PIERSON: Well, Brianna, look...

KEILAR: How does Donald Trump want to change that? You're saying there's no vetting process. I just read the vetting process.

How does he want to change it?

PIERSON: Right.

Brianna, look, here's -- here's the thing. We're not going to base national security off PolitiFact or even the United Nations. We're going to listen to our intelligence agencies, like the CIA and the FBI, who said those are worthless, because many of these people don't show up in these systems, simply because they are not on anyone's -- on anyone's record.

There is no way to vet these people right now. And that's the problem. Just because there's some arbitrary system in place at the United Nations, that doesn't mean that the United States...

KEILAR: Well, I described one that also...

PIERSON: ... has the ability to find out who these people are and why they're coming.

(CROSSTALK)

[18:30: 09] KEILAR: In fairness, Katrina, the process I described involves federal U.S. Agencies. It may start at the U.N., but there are agencies, several of them, in the U.S., including the Homeland Security Department, that is involved.

PIERSON: Absolutely, which is exactly why the CIA and the FBI says these systems do not work. We cannot vet these people. It is entirely impossible to vet these people right now, because they're not in any of these systems, and that's the problem.

KEILAR: All right. Katrina Pierson, thank you so much for joining us. We certainly appreciate it.

And just ahead, more on the financial and political backlash from the decision by British voters to get a divorce from the European Union. How much lower will U.S. stock prices go?

And the National Guard deployed in West Virginia for an urgent door- to-door search in the flood disaster zone. (COMMERCIAL BREAK)

[18:35:43] KEILAR: We're following breaking news in the presidential race. CNN has learned that Donald Trump is preparing to soften his controversial proposal to ban Muslim immigrants from entering the U.S. This as Trump fires back at new attacks from both Hillary Clinton and Senator Elizabeth Warren.

Let's bring in our panel now. Rebecca Berg, she is the national political reporter for Real Clear Politics. We have CNN political director David Chalian; CNN chief political analyst Gloria Borger; and CNN senior legal analyst Jeffrey Toobin.

I want to start with you, Gloria, because this is actually your reporting about these changes that we're expecting Donald Trump to make. From a total and complete ban on Muslims coming into the U.S. to now not emphasizing that Muslim label. And you also just heard what Katrina Pierson, his national spokesman, said about this. What do you think?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, Jim Acosta and I reporting that there is definitely a softening of this temporary ban on Muslims. That it's no longer focused on Muslims. What it now says is that there would be a temporary ban on people coming from countries who train and equip terrorists.

To me, that shows this kind of change in tenor, but it also leaves a lot of questions unanswered, which I don't have the answers to yet. Which countries would it apply to? Would it apply to a country like Saudi Arabia, for example, who -- who is an ally of ours?

KEILAR: And won't take too kindly, perhaps, to that. Right?

BORGER: Right. Exactly. And this is...

KEILAR: European nations, too.

TOOBIN: Or Egypt, also an ally.

BORGER: This is still in the works. It is being finalized. They have not announced it yet. But we should expect Donald Trump to be talking about it in the near future.

TOOBIN: France and Belgium.

REBECCA BERG, REAL CLEAR POLITICS: Katrina Pierson herself, a spokesman for Donald Trump, could not yet answer these basic questions about what his policy is going to be.

And frankly, his original proposal to ban -- a complete and total ban on Muslims coming to the U.S., it didn't have much ambiguity. So this is clearly a shift.

DAVID CHALIAN, CNN POLITICAL DIRECTOR: You know, there's so much in the last year, Brianna, about Donald Trump that's been totally wrong. The thing that I've been most surprised about, the single biggest surprise about Donald Trump, to me, has been that the day after the Indiana primary, when he basically wrapped up the nomination, that he did not do this and start moving away from deporting.

KEILAR: That was his shot to do that, right?

CHALIAN: ... moving away from deporting, which now we're hearing him move away from also.

I thought that Donald Trump would be a candidate who would have no problem in the Etch-a-Sketch moment of just completely changing course and rebuilding and recrafting himself for the general election. And he did not do that. And now, there's been more and more time.

It's these policies -- this is exactly what Paul Ryan and Mitch McConnell and others have wanted to talk to him about. And so I think you're seeing here a candidate who is starting to try to put the building blocks together to have a convention without too much chaos and be able to move on from there. But it's late already in the process.

BORGER: Exactly. Exactly.

TOOBIN: But David, there are only, like, three proposals that Donald Trump is known for. He's going to build a wall. Mexico's going to pay for it, and he's going to not allow Muslims into the United States. How do you back away from the only proposals your campaign has?

CHALIAN: I just think -- remember when he talked about the wall, he also talked about but there would be a big, beautiful door. I just thought his emphasis was going to change as soon as he wrapped up the nomination.

BORGER: Well, but then he...

CHALIAN: It's surprising to me that he has done this in baby steps and taking some more time instead of just aggressively repositioning himself.

And I agree with you. It's difficult. All the video tape is there to push back on him, as the Clinton campaign will do.

BORGER: So I think they've been trying to get him to do that, particularly somebody like Paul Ryan. But I think he got in his own way. Because don't forget: he was -- he was talking about Judge Curiel. He had those problems he had to deal with.

And so, maybe he was trying to shift course. But then he had to course correct in the middle of the shifting. And I think it gets a little complicated.

And I think now, as they head into the convention, the timing is very clear. They want to get everyone on the same page. They don't want to give Paul Ryan, the speaker of the House, an opportunity to yet again back away from -- from Donald Trump. So they're -- they're trying to corral everyone, and this is one way to try and do it. [18:40:02] KEILAR: Is this something that can bring Republicans, establishment Republicans on board? Is this the way to go about it that they're more receptive to?

BERG: I would kind of look at this in the opposite way. That this is one major, major concern that most Republicans have had, even who have endorsed Donald Trump that has been making their life very difficult. And so this isn't necessarily something that Republicans who have been holding out on endorsing Donald Trump are going to say, "Oh, well, now everything's great, and we're going to support him."

But I think the Republicans who have already even endorsed him and have had these lingering concerns, this is going to help.

There has been a lot of pressure from Republican leaders. We've mentioned Mitch McConnell and Paul Ryan, who have spoken out publicly against a Muslim ban as Donald Trump proposed it originally. This has been very public pressure. And this will help, at least, with a facade of party unity going into the convention.

BORGER: Because they were saying the ban was unconstitutional, because you can't ban people because of their religion.

TOOBIN: You know why they were saying that?

BORGER: Because it is.

TOOBIN: It is. Exactly.

BORGER: Thank you very much. Senior legal analyst.

KEILAR: It's great to have a constitutional expert here.

This will just get thrown back in Donald Trump's face, what he said before. It was pretty declarative. It was very clear. How does he really make that change?

BORGER: The way he's made other changes. I mean, I think he says this is to clarify.

You know, one thing I have to say about Donald Trump: people I talk to who talk to Donald Trump say that he listens, actually. If you say something, he listens. Then he may go out and make mistakes, et cetera. But I think this is something that has really been mentioned very strongly to him from congressional leaders.

TOOBIN: No doubt.

BORGER: And they said, "You've got to fix this." And I think he's listening.

CHALIAN: Quick example of just how problematic this is. So you say, also, he's starting to walk away from deportation.

KEILAR: The mass deportation. CHALIAN: And yet -- and yet, an ad that went up on the air in New

Mexico today from the Clinton campaign, in Spanish, made sure to put front and center Donald Trump's plan for a deportation force and getting rid of 11 million people.

So it is going to be hard to walk away from this stuff, because he has talked so much about these policies. But he also has, I think, proven very successful throughout the last year to be able to talk his way through transition moments like this. And he may be able to just talk about this in a way nonstop from now to November that it at least starts erasing some of those concerns from when he announced his last...

KEILAR: And to look ahead for our final question to you, Rebecca. Tomorrow Donald Trump is giving a speech. What are we expecting?

BERG: He is. Well, this is, again, the Trump 2.0 roll out. The teleprompter phase of this campaign. Donald Trump trying to delve a little bit more into policy and establish himself as a little more of a traditional presidential candidate.

But then Donald Trump has this problem of he gets on these stages with the teleprompter, gets pretty decent reviews, actually, from Republicans and from pundits in general. And then he goes and starts speaking off the cuff again, and oftentimes we see whatever progress he made start to unravel once again.

So we'll have to see if he can get to a point where, instead of taking one step forward and three or four steps back, he's actually making some forward progress with these speeches.

KEILAR: All right. And we are getting some new information. Rebecca, David, Gloria, Jeff, stay with me. We'll be back in just a moment.

(COMMERCIAL BREAK)

[18:48:33] KEILAR: We're following the breaking news: U.S. stock prices sinking even lower in response to the British vote to leave the European Union. The Dow losing 900 points since the bombshell results were announced last week. Financial markets are reeling around the globe, and across Europe, politicians are in tail spins.

CNN senior international correspondent Clarissa Ward joining us now in THE SITUATION ROOM.

What's the latest that you're hearing from officials in the E.U. and in Britain?

CLARISSA WARD, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, we've heard a lot of European officials coming out today and essentially, they're all saying the same thing. Don't prolong the agony. Start the Brexit now. But in the U.K., leaders of the leave campaign are desperately stalling for time as they try to work out what a Brexit will actually look out.

And in the meantime, we're seeing a major political vacuum emerge.

(BEGIN VIDEOTAPE)

WARD (voice-over): Fear is sweeping the world's financial markets and the streets of London over concerns that Great Britain's vote to leave the European Union will trigger other nations to do the same. That could set off a wave of turmoil that some worry will be the beginning of the group of 28 nations falling apart.

Scotland is already threatening to break away from the U.K. over the Brexit vote, because they want to stay in the E.U.

Secretary of State John Kerry traveled to Brussels today to discuss damage control.

JOHN KERRY, U.S. SECRETARY OF STATE: I think it's absolutely essential that we stay focused on how in this transitional period nobody loses their head, nobody goes off half cocked, people don't start ginning up, you know, scatterbrained or revengeful premises.

[18:50:11] WARD: It is still unclear what a Brexit would look like. British politicians who campaigned for leaving the E.U. are already walking back a number of promises. Most prominently, a pledge to leave campaign plastered on a bright red bus, that exiting the E.U. would save Britain 350 million pounds a week, money that could be poured into the country's national health service.

NIGEL FARAGE, BRITISH POLITICIAN: Good morning, everybody.

WARD: But in an interview with ITV's "Good Morning Britain", Nigel Farage, leader of the U.K. anti-immigration U.K. Party and one of the faces of the leave campaign, conceded that probably wouldn't happen.

"GOOD MORNING AMERICA" ANCHOR: The 350 million pounds a week we send to the E.U., which we will no longer send to the E.U., can you guarantee that's going to go to the NHS?

FARAGE: No, I can't. And I would never have made that claim.

WARD: The leave movement also promised that a Brexit would bring immigration numbers down. But on BBC's "Newsnight", one leave campaigner appeared to measure expectations.

HOST: Completely at odds with what the public think they voted for.

DANIEL HANNAN, LEAVE CAMPAIGNER: I do not imagine that if we leave the E.U., that means zero immigration from the E.U. It means we will have some control over who comes in and in what numbers.

(END VIDEOTAPE)

WARD: What is becoming more and more clear here is that the "leave" campaign never really had a plan for the day after. And now, they're essentially scrambling to come up with one, which is somewhat practical and practicing pragmatic to try to avert an economic crisis, while also honoring some of their more populous promises. That's why we're seeing these conflicting statements, Brianna.

But I have to say, it is going to be a rocky few months ahead. We know now that there will not be another British leader until September 2nd. And in the meantime, there's a sense in the U.K. that no one is really stepping in to fill the void, to take the leadership.

As I've said many times before, this is unprecedented. We've never seen anything like this. There is no model to refer to. So, Britain now desperately needing that leadership, someone to navigate these murky waters ahead.

KEILAR: Thanks so much for breaking that down for us, Clarissa Ward.

And just ahead, just days after racing torrents killed at least 23 people in West Virginia, heavy rains bring a new threat of deadly flash flooding to much of the state.

(COMMERCIAL BREAK)

[18:56:47] KEILAR: Just days after sudden massive flooding killed at least 23 people in West Virginia, residents in West Virginia are bracing for more. A new flash flood watch is up for most of the state this evening as heavy rain falling on saturated soil could pose grave, new threats. Three hundred National Guard members have been called in to help local emergency officials as they go door to door, looking for residents believed to be missing.

President Obama has declared West Virginia a disaster area, making the state eligible for increased recovery funding.

And tonight, Iraqi forces are assessing the devastation from the battle for Fallujah, just hours after declaring they fully recaptured the strategic city from the control of ISIS.

Our Pentagon correspondent Barbara Starr is working the story for us and has the latest.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): Iraqi forces battle the last of the ISIS militants in Fallujah. Officials now say they have liberated the city, which sits 40 miles west of Baghdad.

AHMED ALI, IRAQ COUNTERTERRORISM SERVICE (through translator): Today was the last battle in Fallujah. We liberated it completely.

STARR: The loss of the city is a big setback from ISIS, denying the terror group a convenient launching pad for attacks on Baghdad. Iraqi forces came across this ISIS bomb factory in Fallujah as they fought to clear the city. IEDs and booby traps remain.

Keeping Fallujah free of ISIS and holding on to the Sunni majority city may still be a challenge for the Shia-led government.

LT. GEN. ROBERT OTTO, U.S. AIR FORCE: It is my best guess that there will still be skirmishes in Fallujah following today, but I think what we're seeing is very positive news.

STARR: And the human cost is staggering. Conditions are desperate for the 85,000 people the U.N. estimates have fled Fallujah and the surrounding area since the Iraqi offensive to retake the city began a month ago.

And a far larger fight looms, liberating Mosul, Iraq's second largest city in the north. Air strikes to isolate ISIS positions are already under way. CNN obtained this footage of a precision strike on a foreign fighter location. Surgical execution of air strikes will be important as civilians are in the tightly packed city of 2 million people.

OTTO: The challenge is to find targets that we can strike where we're not going to inadvertently damage civilians.

STARR: But air strikes alone will not be enough. The biggest test of Iraqi ground forces is still to come.

(END VIDEOTAPE)

STARR: And now, if you are going to have those Iraqi ground forces trying to retake Mosul, the big question for Obama administration is, are you going to have to send more U.S. troops, more trainers, more advisers to help the Iraqis get to Mosul? That will be a very hard fight to retake that city -- Brianna.

KEILAR: Certainly will be. Barbara Starr for us at the Pentagon. Thank you so much.

And be sure to join us tomorrow in THE SITUATION ROOM. I'm Brianna Keilar. Thanks very much for watching.